Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of the crypto.news editorial.
Cryptocurrencies are a topic of much debate about their advantages and disadvantages. Some believe that they can revolutionize the financial system and avoid periodic financial crises caused by certain actors with centralized control. Others argue that they are primarily used for money laundering due to their untraceability and ability to be easily misused for illegal activities.
Cryptocurrencies are a very polarizing topic, with supporters and opponents on both sides of the argument. However, just like a coin, cryptocurrencies have two sides, which can be used for good or evil.
The debate surrounding the use of cryptocurrencies for money laundering is highly controversial, especially when it is also applied to fiat currencies despite strict KYC and AML regulations. Meanwhile, the positive uses of cryptocurrencies far outweigh the fears of skeptics.
A good example is its use for donations during the war in Ukraine. The amount of cryptocurrency received for humanitarian aid and support of the Ukrainian military was significantly higher than that used for illegal purposes, such as financing hacker groups or supporting mercenary organizations.
Immediately after the start of the Russian invasion on February 24, 2022, Ukraine began using all possible means to raise funds for its defense and humanitarian aid. Cryptocurrency donations were no exception.
In July 2023, crypto donations made to Ukraine reached $225 million. crypto-regulations/ukraine-receives-over-224m-in-crypto-donations/” target=”_blank” rel=”noopener”>according to Crystal Blockchain analyses. Among the organizations that raised the most significant amounts are the Help for Ukraine (more than 60 million dollars), Come back alive (more than 28 million dollars), and Serhiy Prytula Charitable Foundation (more than 3.2 million dollars).
Notably, Aid For Ukraine is a crypto fund actively promoted by the government authority, the Ministry of Digital Transformation of Ukraine. The initiative was organized by two companies with Ukrainian roots: Everstake, one of the most trusted validators worldwide, and the Kuna crypto exchange.
It marks a major milestone as the state supported a crypto initiative. It constitutes a positive example for other countries on how cryptocurrencies can be used for the common good.
Another notable example was the sale of the Ukrainian flag as an nft for 2,258 eth (around $6.75 million) in an auction organized by the Ukraine DAO decentralized autonomous organization.
For those unfamiliar with this organizational structure, DAOs are blockchain-native organizations governed by smart contracts, allowing people around the world to organize for a shared goal and contribute to decision-making.
The purpose of a DAO can be diverse, from planting trees in a local community to finding a cure for cancer. In recent years, DAOs have gained popularity primarily due to their decentralized nature, transparency, and collective decision-making. The beauty of this structure is that it has no centralized control over the funds, meaning the community decides how to spend its treasury.
As a result, to support Ukrainians, a community of like-minded people created a Ukrainian DAO, which donated over $7 million in cryptocurrency during the war, and continues to draw attention to the war between Ukraine and Russia.
The war has also affected the personal use of cryptocurrencies by Ukrainian citizens. According to the United Nations High Commissioner for Refugees StatisticsIn February 2024, almost 6.5 million Ukrainians fled the country due to the Russian invasion.
To prevent the departure of capital from the country under martial law, the Ukrainian government put restrictions on citizens' cross-border transactions. As a result, refugees who left the country have faced difficulties accessing their bank accounts. For various reasons, many of them were also unable to open bank accounts in their new country. For these people, cryptocurrencies have emerged as a viable alternative.
The examples given show how Ukraine has used all possible tools that blockchain technology offers in its defense efforts, including cryptocurrencies, NFTs, DAOs, and contributions from key industry players.
Despite the significant influx of donations in the form of cryptocurrencies in Ukraine, Russia has also actively used them during the war, but not always legally.
The elliptical crypto-in-conflict#:~:text=Since%20Russia’s%20full%2Dscale%20invasion,to%20crypto%20pre%2Dpaid%20cards.” target=”_blank” rel=”noopener”>reportprepared during the first year of the invasion, reveals that more than 10% of pro-Russian donations came from illicit channels, including sanctioned entities and dark web markets.
However, the total amount of donations received by Russian organizations is considerably less than that of Ukraine. Chain analysis reports that Russian organizations received approximately $5.4 million in 2023. Unfortunately, many of these entities involved in cryptocurrency fundraising have publicly made crypto%20in%20Conflict%20Report%20%7C%202023&utm_medium=email&_hsmi=247210816&_hsenc=p2ANqtz-9Q3ydxsBp7dGvi9YBfJrciXt6CmqI2GovrFd_u12ptNoF3_HRj0uNEIi7yXzR3eLwzUqmjxtZqGpdDobfdUDs0uHm4453I5kDAMQOw0j8p6KeWP-I&utm_content=247210816&utm_source=hs_automation” target=”_blank” rel=”noopener”>supported and praised possible war crimes and crimes against humanity.
The war appears to have accelerated the adoption of cryptocurrencies. Despite the legislative delay, many Ukrainians are already embracing cryptocurrencies and eagerly anticipate the establishment of a legal framework.
The unprovoked aggression slowed down Ukraine's plans to become one of the most attractive destinations for the cryptocurrency business. However, authorities are working to support the industry by establishing a legal framework that favors its development and growth. It is expected that the necessary amendments to the tax law will be finalized in the near future.
Blockchain and cryptocurrencies have offered Ukraine significant advantages despite ongoing concerns about donations to illegal groups and the use of cryptocurrencies for money laundering and ransomware attacks. It has strengthened the nation's resilience in these difficult times and garnered global support in the face of the Russian invasion.
